Tuesday, February 19, 2013

Is it any wonder you are seeing manipulation of the media by some in the real estate industry?

On of the most important stories that is not making it into the mainstream media is the breadth and depth of the unwinding of our current housing bubble.

We hear hype about 'flat' markets and how sellers are refusing to lower their prices, but it's real estate industry obfuscation.

On February 8th, we showed you how Vancouver is 8 months into a market collapse. 8 months ago Vancouver hit's it's market highs using the MLS HPI.

Since then it has dropped dramatically.

What is particularly chilling is that when you compare Vancouver at the 8 month point into the unwinding of our housing bubble with the 8 month point of US cities like Phoenix, Los Angeles, San Diego, Washington, Miami, Tampa Bay, Chicago, Boston, Minneapolis, Las Vegas, New York, Portland, and Seattle... you discover that Vancouver has plunged faster than all those other cities did - with the exception of Miami.

No wonder condo market companies are so desperate to fake images of Asian buyers lining up to buy in Vancouver!

Here are some single family house Months Of Inventory (MOI) projections for February, 2013 as of last weekend:

West Van – 24 MOI

Richmond – 14 MOI

Burnaby South – 12 MOI

Port Moody – 12 MOI

Van West – 11 MOI

Maple Ridge – 11 MOI

Tsawwassen– 10 MOI

Burnaby East – 8 MOI

Ladner – 7 MOI

Coquitlam – 7 MOI

Van East – 6.5 MOI

Burnaby North – 6 MOI

New West – 5 MOI

North Van – 4.5 MOI

Port Coquitlam – 4 MOI

Total Real Estate Board of Greater Vancouver – 9 MOI

Sales volumes have plunged and inventory is piling up.

How bad is it? Instead of comparing sales volumes to just last year, yvr2shr compares sales volumes to 2011. And when you do, you see single family house (SFH) sales volume is down significantly everywhere.

On the west side of Vancouver, volume is down - 61%

In Richmond sales volume is down – 69%

East side of Vancouver is down – 52%

West Vancouver volume is down – 75%

North Vancouver volume is down – 24%

And Burnaby sales volume is down – 56%

When it comes to house prices, yvr2zhr tells us that the middle class buyer is disappearing from SFH house sales. This is causing some changes in the mix which is pushing the average price up. Despite that, however, decreases are very significant in Van West / Richmond and West Van. He tells us:

"prices are solidly down 10% in past 10 months. The average / median and benchmark prices are all steadily down and it is a clear trend without sales mix issues. Many sales are now occurring for 30-40% off the asking from last Spring."

The easy credit that inflated our housing bubble is being withdrawn as the Federal Government returns mortgage regulations to what they were prior to 2006.

And as that credit is withdrawn, our bubble will deflate. The R/E industry can only hide that fact for so long.

7 comments:

We've fed a steady diet of bull....and darkness in order to keep the momentum going. The party ended in Spring 2012. Most educated buyer/seller knows that and don't buy into the "news" anyway.It’s no different than Libs in Victoria will claim the balanced budget today.

I remember back in around 1990 there was an endless stream of headlines about the Vancouver real estate crash in the local newspapers. I went so far as to clip the articles and only tossed them out a few years ago. It was a fascinating read back through time. There was nowhere near as sophisticated marketing of condos then as there is now. Also, the spin by the local real estate community was not like it is now.

Prices aren't down 5-10%, they're down more than that. The few buyers who are dumb enough to buy now are dumb enough to only take a 5-10% reduction, but if all buyers were considered, prices would be much lower.

Sitting at YVR waiting for my flight to Calgary tonight. Had a pleasant ride with a taxi to the Nanaimo airport with a driver who tells me that he has sold real estate in the Nanaimo/Parksville area for 29 years.

He is driving cab to supplement his income. Says he had plans to retire and bought a house 5 years ago on one of the islands. Ready to retire and move in and he ends up with his granddaughter on his doorstep 4 years ago. She is now 14 with no sign of leaving until she graduates. Gotta take care of family, he says, but I miss my island property which he gets to once a month without his wife who hasn’t quite accepted their present personal financial state.

He says this is the 3rd downturn in his career and the first time he has had to find another income stream. Says he’s not sure when this slide will end….. here’s my card he says, just in case you decide to buy anytime in the future.

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